Micro Final
As shown in Exhibit 8-3, the firm will produce in the short run if the price is at least equal to:
$1.50 per unit (point B).
Refer to Exhibit 9-2. Using the rule that focuses on the marginal approach to maximizing profits, the monopolist maximizes profit by choosing price equal to:
$20
As shown in Exhibit 8-17, the price at which the firm earns zero economic profit in the short-run is:
$20 per unit.
In Exhibit 11-11, the marginal factor cost of the 14th employee is equal to:
$23.30.
In Exhibit 9-10, the monopolist would charge which of the following prices to maximize profit or minimize its loss?
$35
Suppose a monopsonist currently employs 100 workers at a wage of $400 per week. If the firm wants to expand employment to 110 workers, and the 110th worker will only work for $450 per week, what is the approximate marginal factor cost of the 110th worker?
$950 per week.
one reason the supply of carpenters is greater than the supply of physicians is because:
-physicians do not belong to a union. -carpenters demand less income. - carpenters belong to unions.
In Exhibit 9-10, the profit-maximizing or loss-minimizing output for the monopolist is:
150 units per day.
In Exhibit 11-14, the marginal factor cost when the monopsonist goes from 30 to 40 workers hired is:
28
Which of the following is true about a monopoly?
A monopoly charges a higher price and produces a lower output level than if the market were competitive.
In Exhibit 9-1, the marginal revenue curve corresponding to the monopolist's demand curve would be a straight line drawn between points:
A to D
The Clayton Act:
Attempted to give explicit content to what formed an antitrust violation
If the labor market shown in Exhibit 11-8 is a monopsony, the wage rate and number of workers employed will be determined at point:
B
Assume costs are identical for the two firms in Exhibit 10-7. If both firms were allowed to form a cartel and agree on their prices, equilibrium would be established by:
Camel charging the high price and Marlboro charging the high price.
Which of the following market structures describes an industry in which a group of firms formally agree to control prices and output of a product?
Cartel
If a firm acquires the stock of a competing firm that causes a substantial lessening of competition, it would be in violation of the:
Clayton Act
If a firm has a tying agreement with a distributor which substantially lessens competition, then it is likely to be in violation of the:
Clayton Act
Price discrimination that tends to lessen competition is outlawed by the:
Clayton Act
Which of the following is an amendment that strengthened the Sherman Antitrust Act?
Clayton Act
Which two pieces of legislation were passed in 1914?
Clayton Act and Federal Trade Commission Act
Which of the following is not a type of merger?
Diversified Merger
Which of the following would be illegal under the Robinson-Patman Act?
Exxon sells gas at a higher wholesale price to independent gas retailers than to Exxon retailers.
A firm's demand curve for labor coincides with the marginal factor cost of labor curve.
False
A monopsony is defined as a monopoly that has to negotiate with a labor union.
False
In the Alcoa case, the Supreme Court abandoned the per se rule and established the rule of reason.
False
Pure economic profit must be at a maximum for a monopolist who has a level of output in which total revenue is at a maximum.
False
The Sherman Antitrust Act was an amendment to the Clayton Act.
False
The primary purpose of the Celler-Kefauver Act is to prevent unfair and deceptive business practices.
False
If the market price of bicycle frames is $500, and frame welders earn a wage of $50, how many welders will be hired?
Hiring will stop when the MP is 0.1.
As shown in Exhibit 8-12, if the price is OD, a perfectly competitive firm maximizes profit at which point on its marginal cost curve?
I
For a monopolist, the supply of labor facing the firm is:
Identical to the supply curve facing the market
Which of the following statements best describes firms under monopolistic competition?
In the long run, positive economic profit will be eliminated.
The profit-maximizing employment level for a monopolist occurs where:
MRP = MFC
Which of the following is not associated with the monopoly market structure?
Many Sellers
Which of the following is a characteristic of the monopolistic competition market structure?
Many firms and differentiated products.
Which of the following statements is true?
Marginal factor cost is the extra cost to a firm of employing one more unit of a factor of production.
The number of workers hired by a firm at a particular wage rate can be calculated if you know which of the following?
Marginal revenue product of labor.
Monopolists are criticized because they are inefficient. What is meant by this statement?
Monopolists usually don't produce at the minimum of the ATC.
Which of the following statements best describes the price, output, and profit conditions of monopoly?
None of these.
As shown in Exhibit 8-12, if the price is OD, the firm's total revenue at its most profitable level of output is:
OZID
Under a rule of reason approach, an act is illegal:
Only if it is shown to result in an anti-competitive outcome.
In contrast to a perfectly competitive firm, a monopolist operates in the long run at a quantity of output at which:
P > MR.
Exhibit 8-1 indicates that this firm is operating in which type of market structure?
Perfect Competiton
The practice of firms temporarily reducing prices in order to eliminate competition is called:
Predatory Pricing
According to the information provided in Exhibit 9-7, if the Rudd Ice Company was a monopoly and is currently charging a price of $8, what would you advise Rudd to do?
Stay where he is currently operating because he is charging the profit maximizing price.
Which of the following is the best example of an oligopoly?
The automobile industry.
As shown in Exhibit 8-19, assume that a perfectly competitive industry is in long-run equilibrium at point A and the demand curve shifts from D1 to D2. Which of the following is a part of the industry adjustment process?
The price will temporarily rise at point B. New firms will enter the industry. Firms will temporarily make positive economic profits.
Which of the following correctly explains why sellers in a perfectly competitive market are price takers?
There are many sellers, and so the market process generates an equilibrium price that cannot be influenced by any one seller. Thus they have no choice but to take the price generated by the market process.
Which of the following is characteristic of a perfectly competitive market?
There is free entry into and exit from the market.
Which of the following best explains why the monopolist's marginal revenue is less than the selling price?
To sell more units, the monopolist must reduce price on all units sold.
A cartel is a formal agreement among firms to control price and output of a product.
True
An oligopolist operating with a kinked demand curve would expect rivals to match both its price increases and price decreases.
True
In the short run, the profit maximizing (or minimizing) quantity of output for any firm to produce exists at that output level at which marginal revenue equals marginal cost.
True
The theory of oligopolistic interdependence means that the outcome is uncertain because price and output decisions depend on responses of rivals.
True
In Exhibit 11-14, the monopolist will maximize profits by hiring how many workers?
Unable to determine from the given information.
A merger between a leather supplier and a shoe manufacturer would be classified as a:
Vertical Merger
Which of the following determines equilibrium wages in perfectly competitive labor markets?
Where the supply and demand of labor are equal.
Campbell Soup agrees to sell its brand to a grocery chain only if the chain also agrees to buy a minimum number of cases of its V-8 juice. This is an example of:
a tying agreement.
Suppose Ford, GM, and Dodge make the majority of pick-up trucks sold in the United States If they all sell for approximately the same price, and Ford offers a $2,000 rebate on new truck sales, what can Ford expect to see?
an immediate response by GM and Dodge
A perfectly competitive firm's supply curve follows the upward-sloping segment of its marginal cost curve above the:
average variable cost curve.
Compared to monopoly, the market results with monopolistic competition are usually expected to be:
better because consumers pay a lower price.
One of the necessary conditions for price discrimination to occur is that:
buyers in different markets have different elasticities of demand.
In an oligopoly industry, price:
cannot be predicted exactly, because it is likely to lie between the competitive and monopoly prices.
The demand for labor is:
derived demand
As shown in Exhibit 9-7, in the short run, the monopoly will:
earn an hourly profit of $80.
To maximize its profit, a monopoly should choose a price where demand is:
elastice
Which of the following firms operates in a natural monopoly?
elephone company. Electric company. Water company.
The Civil Aeronautics Board (CAB) was:
established in 1938 and eliminated in 1984.
Assume that a firm's marginal revenue just barely exceeds marginal cost. Under these conditions the firm should:
expand output
The monopolist, unlike the perfectly competitive firm, can continue to earn an economic profit in the long run because of:
extremely high barriers to entry
In Exhibit 10-4, the exhibit represents a kinked-demand oligopoly model. Suppose the current price is $50. If one firm in the oligopoly now attempts to lower price, all firms will:
follow along demand curve D2.
A "kinked" demand curve reflects a tendency on the part of an oligopolist to:
following price reductions but not price increases.
A price-discriminating monopoly charges the lowest price to the group that:
has the most elastic demand.
Compared to a perfectly competitive firm with the same cost structure, a monopoly firm will charge a:
higher price and sell less.
A worker's accumulated investment in education, training, experience, and health is called:
human capital.
If a firm is operating at a loss in the short run and finds that its price is greater than average variable cost, then in the short run:
it should produce where MR = MC.
An advance in technology which increases labor productivity will shift the:
labor demand curve to the right.
If a regulatory commission sets the regulated price equal to marginal cost for a natural monopoly:
losses will result.
A perfectly competitive firm sells its output for $100 per unit and marginal cost is $100 per unit. To maximize short-run profit, the firm should:
maintain its current output.
The monopsonist's labor supply curve is the same as the:
market labor supply curve.
Under monopoly, a firm:
maximizes profit by setting marginal cost equal to marginal revenue.
Pricing and output determination under an oligopoly is more complicated than pricing and output determinations in other industries. The primary reason for the complication is the:
mutual interdependence of firms.
Market structure is defined as the:
number of firms in each industry. similarity of the product sold. ease of entry into and exit from the market.
A(n) ____ can be used to demonstrate why a competitive oligopoly tends to result in a low-price strategy that does not maximize mutual profits.
payoff matrix
Because a competitive firm is a price taker, it faces a demand curve that is:
perfectly elastic.
The "kinked" oligopoly demand curve is a result of the assumption by an oligopolist that:
price increases will not be matched, but price reductions will.
The theory of monopolistic competition predicts that in long-run equilibrium a monopolistically competitive firm will:
produce the output level at which price equals long-run average cost.
The demand curve in monopolistic competition slopes downward because of:
product differentiation.
The purpose of antitrust laws is to:
reduce anti-competitive activities.
A perfectly competitive firm's short-run supply curve is the:
segment of the marginal cost curve above the minimum level of average variable cost.
In Exhibit 11-12, we know this exhibit shows a monopsonistic labor market because:
the MFC curve lies above the supply of labor curve.
The marginal revenue product of labor is:
the contribution to total revenue made by the marginal laborer.
If there is a permanent increase in demand for the product of a perfectly competitive industry, the process of transition to a new long-run equilibrium will include:
the entry of new firms. You Answered temporarily higher profits.
If the demand for a product increases in an increasing cost industry, as the market adjusts in the long run:
the firm's per-unit cost will increase.
A horizontal merger between two firms occurs when:
the merger partners were competitors.
Under the Clayton Act,
the same person cannot sit on the boards of directors of competing corporations.
In the short run, a firm should shut down its operation if:
ts losses are greater than TFC at the MR = MC point.
As represented in Exhibit 10-2, the maximum long-run economic profit earned by this monopolistic competitive firm is:
zero
In the long run, both monopolistic competition and perfect competition result in:
zero economic profit for firms.
